Lesson 2: Where Does It All Go?

Saving & Budgeting Basics

Introduction

Before you can tell your money where to go, you need to know where it’s been going. Most people underestimate small expenses and overestimate how much they’re “saving.”

This lesson is about shining light on the where your money goes – there’s no judgement but to see where you money really goes

Once you know the flow of money in and out, you’ll be able to make intentional choices instead after the fact ones

Step 1: Understand Your Cash Flow

Cash flow = Money In – Money Out.
Simple concept, but surprisingly few people can describe it off the top of their head.

Money In: salary, side income, interest, refunds, gifts.
Money Out: housing, transportation, debt, subscriptions, food, “fun spending,” etc.

When you look at it over a full month, patterns emerge:

Are you spending more than you think on small conveniences?
Are you consistent with savings transfers?
Do income spikes or dips throw you off?

Step 2: Track Your Spending for 7 Days

For one week, write down every purchase — yes, even the $4 coffee.
It’s short enough to manage, long enough to show habits.

Tools you can use:

Phone notes or a spreadsheet
Free apps (Mint, Monarch Money, YNAB)
Bank or credit-card export

Track these details:

Date	Expense	Category	Amount	Need / Want	Note
10/7	Gas	Transportation	$48	Need	—
10/8	Lunch out	Dining	$14	Want

At the end of 7 days, total each category and reflect:
➡ Where did most of your “wants” go?
➡ Were there surprises?
➡ How did the process feel — eye-opening, stressful, motivating?

Step 3: Group Expenses into Categories

You don’t need 50 categories. Five to seven is plenty.

Core Category	Typical Items
Housing & Utilities	Rent, mortgage, power, internet
Transportation	Gas, car payment, rideshare
Food	Groceries, dining out
Insurance & Debt	Minimum payments, policies
Lifestyle & Subscriptions	Streaming, gym, shopping
Savings & Goals	Transfers, investments

Step 4: Spot the Leaks(or drags)

“Leaks” are tiny, spends that drain progress without bringing real value. We sometimes call these drag, as it can drag down your spending

Common culprits:

Multiple streaming services
Delivery fees & impulse orders
Monthly “free trial” charges
Convenience buys (coffee, bottled water, parking apps)

Mini-challenge:
Pick one leak to plug this week. Redirect that amount to your emergency-fund goal instead.

Step 5: Review Weekly, Not Yearly

Budgeting fails when you only look back once a year.
Instead, make Sunday your Money Check-In Day:

Glance at bank balances.
Note anything surprising.
Decide what needs adjusting this week.

Ten minutes is enough. Consistency beats complexity.

Key Takeaways

Awareness = control; tracking shows you the truth.
You can’t manage what you don’t measure.
Focus on habits, not perfection — progress comes from regular check-ins.
Every dollar needs a direction: save, spend, or invest.

Now that you know where the money goes, Lesson 3 dives into how emotions influence those choices — The Psychology of Spending.